Exemption of sales tax might continue in coming years, said PRA Chairman

by index360

LAHORE: Chairman Punjab Revenue Authority Zainulabidin Sahi said that the exemption on sales tax on 35 services might continue for the years to come.

He further said that slashing the rate of sales tax on services from 16% to 5% during Covid-19 pandemic outbreak actually helped the authority to close its financial year in surplus of its targets.

“PRA surpassed its target of Rs105 billion for the year 2019-20 and close down that financial year at Rs108.59 billion, for the year 2020-21, PRA collected Rs144 billion against its initial target of Rs125 billion”, Sahi said while talking with Lahore Economic Journalists Association on Tuesday.

The Punjab government in 2020 had announced to give a relief package to small business in a bid to combat the Covid-19 aftermaths, as a result of which sales tax on services for nearly 35 services was reduced from 16% to 5%.

Chairman PRA said that we have to increase our tax base but it should not affect the economy or Ease of Doing Business. “We made an analysis of why our tax ration is low, the outcome shows that most of the people do not have any awareness and they do not know how and where they have to be registered, lack of knowledge compel us to conduct several workshops to business”.

Till date the authority has managed to register 1,00,000 tax payers by December 2021 against the target assigned till June 2022. In first six months of current financial year, the Chairman said that the authority has collected RS72 billion, as compared to Rs58 billion in corresponding period.

“PRA is registering almost 22% annual revenue growth which is almost double of nominal GDP rate of the country, we are hopeful that we will easily achieve this year’s target of Rs155.9 billion”, Sahi added.

Elaborating the policy reforms, he said that a policy was adopted in which taxpayer interactions were ensured before going to the courts, this has resulted in reduction of court cases to only 574, out of which 64 are tax references in Lahore High Courts and 510 are writ petitions. Whereas, monthly new cases ratio is reduced to less than five.

He explained that majority of times, taxpayers were unaware about the issues and approached the court whereas now we try to resolve the issues within the authority which resulted in drastic decline in litigations.

Following the open door policy, trust of the taxpayers has increased in PRA as the taxpayer knows the issues would be resolved. ‘‘PRA is a zero corruption department despite interactions with the taxpayers as both taxpayers and authority officials know about zero tolerance policy on corruption and tax evasion’’, he claimed.

Further, policy of non-corrosive measures has also increased the trust of taxpayers. Any PRA official could not take any action of sealing of any business and attachments of bank accounts of taxpayers expect the Chairperson. During the last year, corrosive measures were taken against only three cases, Sahi added.

On a question about taxing the international services providers like Google, Netflix and others in the province, Sahi said that a mechanism is needed to get tax from the taxpayers. He said that once a mechanism has been devised, taxpayers will be compelled to pay taxes. Thus, the PRA is devising a mechanism in which seamless system would be made for the international technology companies and services providers to pay the taxes. He believed once the mechanism will evolve than the international companies will pay the taxes.

On tax evasion by the restaurant sector, Chairperson PRA said that so far 750 Point of Sales (POS) were integrated with the PRA system while further integration was underway. Besides, integration of the businesses which included restaurants, beauty parlors and others, the PRA also creating awareness among the small restaurants and service providers working without POS with conventional method to get themselves registered with the authority and start paying taxes. Further, the PRA is also opening tax offices in the small cities where it believed the good number of unregistered businesses is operational. These cities included Muree, Sialkot, Gujarat and others.     

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